After a strong start on Friday, stocks began to falter throughout the trading session. Despite early highs, the significant weight of the tech sector dragged Nasdaq into a deficit.
Currently, there's a slim differential amongst major averages. The dip in Nasdaq stands at 16.23 points or 0.1 percent, settling at 16,330.04. In contrast, the S&P 500 is up by 3.51 points, or 0.1 percent at 5,217.59, and the Dow is experiencing an increase of 68.71 points, or 0.2 percent, putting it at 39,456.47.
The buoyant mood within Wall Street was fueled by a renewed sense of optimism about the future trajectory of interest rates, propelling the Dow towards a seven-day consecutive win. Data has indicated a slight decline in the robustness of the U.S labor market, compelling investors to place their faith in the Federal Reserve's prospective decision to cut interest rates in the upcoming months.
While it is widely anticipated that interest rates will remain unchanged in June, the FedWatch Tool from CME Group predicts a 76.2 percent probability of a rate reduction by September.
However, this early investor confidence was dampened by the announcement of a report by the University of Michigan. The report revealed a significant decline in U.S. consumer sentiment for May. In April, the consumer sentiment index stood at 77.2 but plummeted to 67.4 the following month, confounding economists who had predicted a slide to 76.0.
This drastic decline resulted in the consumer sentiment index hitting its lowest point since last November, when it recorded a score of 61.3. The report also highlighted a marked increase in inflation expectations for the upcoming year, escalating to 3.5 percent in May from 3.2 percent in April, the steepest since last November's 4.5 percent.
Long-term inflation expectations witnessed a slight rise, from 3.0 percent in April to 3.1 percent in May, remaining high in comparison to the pre-pandemic range of 2.2-2.6 percent.
Sector-wise, most major sectors exhibit only minor fluctuations, contributing to the overall lackluster performance of the broader markets. Notably, semiconductor stocks registered a significant rise, with the Philadelphia Semiconductor Index marking a 1.0 percent increase.
Networking stocks also showed improvement, while natural gas and retail stocks dwindled.
Internationally, most Asia-Pacific stock markets reported gains on Friday. With a 2.3 percent surge, Hong Kong's Hang Seng Index and Japan's Nikkei 225 Index, which rose by 0.4 percent, stood out. Major European markets also reported gains, including the U.K.'s FTSE 100 Index, which climbed 0.6 percent, and the French CAC 40 Index and the German DAX Index, both of which rose by 0.4 percent.
In the bond market, treasury bonds faced significant downward pressure, leading to an increase of 5.1 basis points in the yield on the benchmark ten-year note, which fluctuates inversely to its price, at 4.500 percent.
